Home Insurance 101: Everything you need to know

Once you have purchased your brand new home, the next most important step is buying borne insurance. Home insurance can protect homeowners from any damage to the house and its valuables. Here is everything need to know about home insurance.

Benefits of home insurance:

Comprehensive coverage for the house and the people
Security during any natural calamities
Stress-free as a homeowner or landlord since the home is effectively protected
In case of substantial damage, rehabilitation is easy since insurance companies make pay-outs

Types of home insurance policies:

Basic fire policy:

Most basic home insurance covers all types of damage caused by fire and other natural disasters including earthquakes, landslide, cyclones, etc.

Homeowners package policy:

A much more comprehensive scheme
Covers the structure of your home and its contents. Covers missile testing, gas and/or water pipe explosions, man-made riots, strikes, etc.

How is home insurance premium calculated?

Determine the coverage amount and once that is done, you will need to compute the premium costs for the home insurance scheme you have selected. Premium is calculated based on the following:

Type of home ownership - rented or owned
The sum insured, which is calculated, based on the built-up area and construction cost
The total cost based on market value of contents and valuables

How is sum insured determined?

The price you pay fur a property is divided into three components - land, locality and building costs
Sum insured is only for the building cost. Eg: If the market value of your home Is 50 lakh and the building cost is 20 lakh, then you insure your house for a maximum of 20 lakh only

What do home insurance policies not cover?